MARKETS UPDATE (9:00 pm EST)
In my last blog on the broad stock market (last Tuesday) I wrote:
"...this current rally may be peaking now in a very strong reversal zone, so a correction down could be imminent. Because this market still looks bullish, I am going to take the strategy of waiting for a sub-cycle corrective low to buy for more rallying into December. Good targets for a corrective low could be around 30,700 in the DOW and 3,700 in the S&P 500."
Well, the DOW and S&P did fall a bit on Wednesday and Thursday, but then both started to rally again. That was not a significant sub-cycle correction, but we may be seeing a set-up for one now. Rallies often happen into holiday week-ends, and this week we head into Thanksgiving in the U.S. on Thursday followed by "Black Friday" (not an official holiday, but many people take it off). The markets are rallying, but only the DOW made a new weekly high today. The S&P 500 is lagging behind just a bit, but the NASDAQ is well below its high from last week. We thus have a bearish divergence signal setting up as we move into the center of a general reversal zone (Nov. 16 - 25) that ends this week or early next week (unless both the S&P 500 and the NASDAQ can make new weekly highs). There is a potential here for a significant corrective drop following the holiday. We wlll watch for that and a possible spot to go long for potentially more rallying into December (perhaps a Santa Claus rally?). Let's remain on the sidelines for now.
Gold made a high at $1786.53 last Tuesday in the center of a general reversal zone, and prices have fallen moderately from there to a low of $1732.59 yesterday (Monday). Is the correction over? It might be, but we note that we are now entering a very wide reversal zone specifically for the precious metals from Nov. 22 through Dec. 9 with possible "pivot points" on Nov. 25., Dec. 1, and Dec. 7. Even if we see some rallying from yesterday's low, prices will be rising into this reversal zone and could form a high and reverse back down quickly. On the other hand, if prices continue to fall, we could see a significant corrective bottom to buy in this same time frame. We will remain on the sidelines of gold for now.
Silver also took a correction from last Tuesday's high of $22.25 to yesterday's low at $20.59. As with gold, we might see that price go lower into our new reversal zone. Let's wait and see if that happens. If prices move down to $20 or lower, it may be a good place to buy for a strong rally back up. We will stay on he sidelines of silver for now.
In last Thursday's blog on crude oil, I wrote:
"This market's trend is not clear at the moment. A break above $93.74 would make it bullish but a break below $75.70 would make it bearish and susceptible to a drop as low as $65."
Crude prices plunged to $75.27 (Jan. contract chart) yesterday, but then snapped right back up to close just above $80. That could be a significant bottom, especially since we are in the center of a wide reversal zone for crude (Nov.11 - Dec. 1). Yesterday's bottom could be a "double-bottom" to the Sept. 28 low of $74.96 (we have switched to the Jan. contract chart), but we need to see a strong rally now to confirm that. We still can't rule out prices falling lower, especially if we are still in an older medium-term cycle that started on the Aug. 16 low at $84.31 (instead of a new one starting from Sept. 28). The fact that prices are challenging the Sept. 28 low is a bearish warning, and there is still plenty of time (the rest of this month) for crude to make a lower bottom within our current reversal zone.
Last Friday, the Biden White House released a statement declaring its Administration would repurchase crude oil for the SPR (Strategic Petroleum Reserve) when prices get at or below $67 - $72 per barrel. If the Administration follows through with this plan, that price range could be a good spot to buy. As mentioned above, if crude turns bearish and breaks below $74.96, we could see prices fall quickly into Biden's price range, so we should be on the lookout to buy this week or next if prices go that low. For now, we will remain on the sidelines of crude.
In my last blog on the broad stock market (last Tuesday) I wrote:
"...this current rally may be peaking now in a very strong reversal zone, so a correction down could be imminent. Because this market still looks bullish, I am going to take the strategy of waiting for a sub-cycle corrective low to buy for more rallying into December. Good targets for a corrective low could be around 30,700 in the DOW and 3,700 in the S&P 500."
Well, the DOW and S&P did fall a bit on Wednesday and Thursday, but then both started to rally again. That was not a significant sub-cycle correction, but we may be seeing a set-up for one now. Rallies often happen into holiday week-ends, and this week we head into Thanksgiving in the U.S. on Thursday followed by "Black Friday" (not an official holiday, but many people take it off). The markets are rallying, but only the DOW made a new weekly high today. The S&P 500 is lagging behind just a bit, but the NASDAQ is well below its high from last week. We thus have a bearish divergence signal setting up as we move into the center of a general reversal zone (Nov. 16 - 25) that ends this week or early next week (unless both the S&P 500 and the NASDAQ can make new weekly highs). There is a potential here for a significant corrective drop following the holiday. We wlll watch for that and a possible spot to go long for potentially more rallying into December (perhaps a Santa Claus rally?). Let's remain on the sidelines for now.
Gold made a high at $1786.53 last Tuesday in the center of a general reversal zone, and prices have fallen moderately from there to a low of $1732.59 yesterday (Monday). Is the correction over? It might be, but we note that we are now entering a very wide reversal zone specifically for the precious metals from Nov. 22 through Dec. 9 with possible "pivot points" on Nov. 25., Dec. 1, and Dec. 7. Even if we see some rallying from yesterday's low, prices will be rising into this reversal zone and could form a high and reverse back down quickly. On the other hand, if prices continue to fall, we could see a significant corrective bottom to buy in this same time frame. We will remain on the sidelines of gold for now.
Silver also took a correction from last Tuesday's high of $22.25 to yesterday's low at $20.59. As with gold, we might see that price go lower into our new reversal zone. Let's wait and see if that happens. If prices move down to $20 or lower, it may be a good place to buy for a strong rally back up. We will stay on he sidelines of silver for now.
In last Thursday's blog on crude oil, I wrote:
"This market's trend is not clear at the moment. A break above $93.74 would make it bullish but a break below $75.70 would make it bearish and susceptible to a drop as low as $65."
Crude prices plunged to $75.27 (Jan. contract chart) yesterday, but then snapped right back up to close just above $80. That could be a significant bottom, especially since we are in the center of a wide reversal zone for crude (Nov.11 - Dec. 1). Yesterday's bottom could be a "double-bottom" to the Sept. 28 low of $74.96 (we have switched to the Jan. contract chart), but we need to see a strong rally now to confirm that. We still can't rule out prices falling lower, especially if we are still in an older medium-term cycle that started on the Aug. 16 low at $84.31 (instead of a new one starting from Sept. 28). The fact that prices are challenging the Sept. 28 low is a bearish warning, and there is still plenty of time (the rest of this month) for crude to make a lower bottom within our current reversal zone.
Last Friday, the Biden White House released a statement declaring its Administration would repurchase crude oil for the SPR (Strategic Petroleum Reserve) when prices get at or below $67 - $72 per barrel. If the Administration follows through with this plan, that price range could be a good spot to buy. As mentioned above, if crude turns bearish and breaks below $74.96, we could see prices fall quickly into Biden's price range, so we should be on the lookout to buy this week or next if prices go that low. For now, we will remain on the sidelines of crude.
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